R2CF Bacau sub-project

Location:

Romania

Project number:

43362

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Environmental category:

B

Approval date:

11 Jun 2013

Status:

Repaying

PSD disclosed:

28 Mar 2013

Translated version of this PSD: Romanian

Project Description

The EBRD is considering providing a EUR 16.4 million loan to Compania Regionala de Apa Bacau S.A. (the “Company”), a water utility operating in Bacau County (ca. 265 thousand inhabitants) in northern Romania.

The project includes two components.

The first entails co-financing to Cohesion Fund of up to EUR 10.2 million for key investments in the County of Bacau to meet EU water and wastewater directives. The Bank’s loan would co-finance a regional investment programme totalling EUR 114.5 million, which will include significant grant funding from the European Union, the Government of Romania and the local governments under Romania’s Cohesion Fund Programme. The project is expected to improve the quality of drinking water in Bacau County and expand wastewater collection and treatment in line with relevant EU water and wastewater legislation.

The second component of EUR 6.2 million includes a restructuring of the existing EBRD Municipal Environmental Loan Facility signed on 26 November 2004 to take into account the Company's transformation into a commercial company and regional operator.

Transition Impact

R2CF Bacau together with other sub-projects under the Framework will support environmental improvements, efficiency gains from continued regionalisation of water and wastewater services and transfer of commercial and managerial skills in water and wastewater operations to less-developed localities. Compliance with the European Union's relevant water legislation is also envisaged.

Under the Framework Extension, the transition impact is also sought by building procurement expertise with the goal to obtain certification by an internationally-recognised professional institution for best practice procurement procedures.

Expected transition impact rating 

Transition impact potential: Good
 
Transition impact risk: High

The Client

Compania Regionala de Apa Bacau SA, providing water and wastewater services in the County of Bacau, located in northern Romania.

EBRD Finance

Senior loan of up to EUR 16.4 million for R2CF Bacau.

Project Cost

EUR 120.7 million.

Environmental Impact

Categorised B. The potential environmental and social impacts associated with the rehabilitation of water treatment plants, extension of water supply and wastewater collection networks and the extension, dismantling and re-construction and operation of wastewater treatment plants (WWTP) are expected to be site specific and readily addressed through mitigation and management measures. The Romanian Environmental Protection Agency (REPA) undertook an EIA screening process for all five agglomerations’ sub-projects in accordance with applicable Romanian EIA legislation, which is harmonised with the EU EIA Directive. As a result of the screening process, an EIA was required for the Bacau agglomeration on the basis of which an Environmental Agreement was issued. Only Technical Memoirs were required for the other four agglomerations. None of the sub-projects involves an extension of an existing WWTP or a new WWTP with a capacity of 150,000 p.e. or more and therefore is not considered a Category A project under the EBRD’s Environmental and Social Policy.

Environmental and social due diligence (ESDD) has been carried out by independent consultants. The ESDD included a site visit, review of the Company's existing environmental and social (E&S) management systems, available technical and environmental documentation prepared in accordance with Romanian permitting requirements and the project appraisal documents prepared for the EU Cohesion Fund application as well as assessment of the project against EU environmental requirements and the EBRD Performance Requirements (PRs). The ESDD established that the Company’s existing E&S management systems are well developed and it has an integrated ISO 14001, ISO 9001, and OHSAS 18001 management system in place.

The ESDD concluded that the project will significantly improve water supply and wastewater services and in so doing mitigate public health risks and improve the quality of the local environment. Implementation of the project will ensure compliance with national and EU requirements within the transition period agreed for meeting requirements of EU Directive 98/83/EC on drinking water quality (by 2015) and EU Directive 91/271/EC on urban wastewater (from 2013 to 2018 depending on the agglomeration size). The project is expected to result in an increase in connection rates to 90% from the current averages of 89% for water supply and 67% for wastewater services. The Ministry of Environment and EU have agreed that above 90% level of connection is considered as compliant with the EU Directives, because there are some areas with low population density where connection to the centralised networks is not cost-effective. The ESDD showed that the project would not cause significant adverse environmental and social impacts. Construction works will have limited, localised and short-term adverse impacts, which can be mitigated or prevented by adhering to good construction practice. The ESDD did not identify significant need for land acquisition that could cause significant physical or economic displacement impacts. The planned tariff increases are not expected to generate affordability challenges for the average and lower income households. Part of the Bacau water supply and wastewater network extension will be close to a Natura 2000 site (ROSPA0063 Buhusi-Bacau-Beresti Lakes) in the urbanised area of the Bacau Municipality. Potential impacts on this site have been assessed as part of the EIA required by Romanian authorities for that sub-project and concluded that the proposed network extensions are unlikely to have significant impacts on the integrity or conservation objectives of the Natura 2000 site.

An Environmental and Social Action Plan (ESAP) has been developed to ensure the Project will be implemented in compliance with the EBRD's PRs. The ESAP commits the Company amongst others developing site specific E&S Management Plans for each sub-project; enhancement of the Company’s Integrated Management System, monitoring procedures and resource capacities for the management and monitoring of environmental, social and occupational health and safety issues, including contractor performance, associated with the project; the revision and implementation of the sludge management action plan, developing procedures for temporary use of land and temporary economic displacement; developing and implementing a cultural heritage chance finds procedure and an asbestos handling and disposal procedure; and implementing a Stakeholder Engagement Plan compliant with EBRD PR 10.

The Company will provide the Bank with annual environmental and social reports, including updates on the implementation of the ESAP. The Bank will commission a completion audit and may also conduct monitoring visits, as required.

Technical Cooperation

The project will benefit from TC under the original Framework and its extension, including:

  • Analysis of the environmental and social impacts, issues and risks and a gap analysis. (EUR 125,000 under the original Framework and extended by EUR 100,000 to support sub-projects under the Framework extension), financed by the Government of Spain.
  • Financial due diligence (EUR 75,000 under the original Framework and extended by EUR 91,000 to support sub-projects under the Framework extension), financed from the Bank’s own resources.
  • Benchmarking and FOPIP programme (EUR 750,000 under the original Framework and extended by EUR 257,301 to support sub-projects under the Framework extension), financed by the EBRD Shareholder Special Fund.
  • Sector-Wide Pilot Project to Enhance Transition through Procurement Benchmarking and Certification (EUR 180,000 under the Framework extension), financed by the EBRD Shareholder Special Fund.
 

Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

Public Information Policy (PIP)

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Text of the PIP

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